Commentary

RCB/4/19 VAT—domestic reverse charge for businesses trading in renewable energy certificates

Part V16 Forms and other HMRC material

RCB/4/19 VAT—domestic reverse charge for businesses trading in renewable energy certificates

RCB/4/19 VAT—domestic reverse charge for businesses trading in renewable energy certificates

Revenue & Customs Brief, Issue 4. 13 June 2019

The government has introduced legislation, in the form of a statutory instrument, to introduce a reverse charge accounting mechanism ('domestic reverse charge') for supplies of gas and electricity certificates in the UK ('renewable energy certificates'). This is in response to a serious and credible threat of missing trader intra-community fraud in those supplies.

The purpose of this brief is to provide guidance on how the domestic reverse charge will operate. It should be read with Notice 735: VAT domestic reverse charge on specified goods and services.

1 Who needs to read this?

You should read this if you're a business registered or liable to be registered for VAT that buys or sells renewable energy certificates.

2 Background

A domestic reverse charge means the UK customer receiving supplies of renewable energy certificates must account for the VAT due on these supplies on their VAT return rather than the UK supplier.

The customer can deduct the VAT due on the supplies as input tax, meaning no net tax is payable to HMRC, subject to the normal rules for reclaiming VAT. This removes the opportunity for fraudsters to steal the VAT due to HMRC and follows similar measures introduced in response to criminal threats for:

  1.  

    •     mobile telephones

  2.  

    •     computer chips

  3.  

    •     emissions allowances

  4.  

    •     gas and electricity

  5.  

    •     telecommunication services

3 Timing and scope of implementation

3.1 Timing

The reverse charge will take effect from 14 June 2019 and will apply to

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial